UK Injury Compensation News

Politicians from all the major parties have added their voices to calls for refunds from banks for interest rate derivatives to be made more transparent.

Under the current FSA six billion pounds rate swap mis-selling compensation scheme the banks who perpetrated the mis-selling scandal are in charge of all investigations into determining whether a product was mis-sold and have appointed their own “independent reviewers” to oversee the process.

The FSA scheme has also been criticised for allowing the banks to be in charge of determining whether a business will be granted compensation, to what level and in what time span. Now politicians from all parties are seeking a Treasury Select Committee (TSC) inquiry, as well as the possible revision to the scheme.

Conservative MPs Caroline Nokes, Mark Garnier and Guto Bebb have all called for an independent enquiry into the refunds from banks for interest rate derivatives, while Bebb has launched an All Party Parliamentary Group on the mis-selling of Interest Rate Swap Agreements (IRSAs) to small and medium sized businesses.

Liberal Democrat Business Secretary Vince Cable recently sent MP Tessa Munt to a conference hosted for the benefit of 700 business owners who are seeking compensation for mis-sold interest rate swaps, while Green Party MP Caroline Lucas wrote in her blog “as well as helping to set up an all-party group in parliament, I’m backing calls for an immediate inquiry by the TSC to find out how the mis-selling was allowed to occur.”

Labour Leader Ed Millibrand took advantage of his party´s recent conference to highlight the plight of small businesses crippled by unfair bank interest payments, while MP Chris Leslie sent a letter current managing director of the FSA Martin Wheatley in which he wrote:-,

“Wrong-doers will be investigating their own wrong-doing, many businesses will feel that this is not only flies in the face of natural justice, it means that victims of mis-selling will have no trust in the outcome of the process.”

The FSA´s response to criticism of their scheme for the refund from banks for interest rate derivatives was, “Discussions with the banks have been wholly focused on getting the right outcome for those people who bought these products and insuring that there is a thorough review of their sales.”

Figures released by the Financial Ombudsman Service (FOS) show that it has received more than 100,000 complaints in the last six months in relation to claims for PPI misselling.

Many of the complaints have been due to customers being refused refunds for mis-sold payment protection insurance (PPI) policies despite being sold policies which they would have been unable to claim against because of their personal circumstances. Other reasons for complaints to the FOS included the length of time it was taking for banks to resolve claims for PPI mis-selling and where banks had told customers that no PPI policy existed – despite evidence to the contrary.

The number of complaints already received means that the FOS´s estimate of 165,000 complaints in 2012 due to claims for PPI mis-selling is easily going to be surpassed. Chief Ombudsman, Natalie Ceeney, said commented on the figures by saying “with the ombudsman receiving 100,000 PPI complaints in the last six months alone, it’s clear that unless the banks sort out their complaints quickly and fairly, consumers will only face longer waits for justice”.

The news of the record number of complaints received by the FOS comes just days after the Financial Services Authority (FSA) revealed that it had received more than 2.2 million complaints due to claims for PPI mis-selling in the first half of this year – up 129 percent on the corresponding figure for last year and the highest six-monthly figure ever recorded. The FSA also produced a list of the most frequent reasons for PPI being mis-sold.

Customers were pressured into taking out PPI

It was not made clear to customers that PPI was optional

Customers were advised to take out PPI even though it was not suitable for them

Customers were told that buying PPI was a condition of being approved for a loan

Exclusions which disqualified the customer from claiming were not explained

The PPI was added to a customer´s loan without their knowledge

 Customers were not advised that the term of the PPI might expire before the term of their credit

It was not made clear that customers would pay interest on the PPI premium if it was added to a loan

Compensation claims for mis-sold interest rate derivatives could exceed 40,000 according to new information released by the Financial Services Authority (FSA).

The news follows further investigations into mis-selling practices by a number of high street banks who mis-sold insurance policies to small and medium sized businesses on the basis of protecting them from future interest rate increase on their bank loans.

The policies were mostly sold between 2005 and 2008 when interest rates were at their lowest since 1955; however, since then, bank interest rates have plunged to just 0.05% – leaving thousands of businesses tied into crippling finance agreements due to the amount of interest they have to pay to the banks.

Back in June, the FSA announced that a 6 billion rate swap mis-selling compensation scheme was to be established after an investigation discovered “serious failings” by the UK´s four leading lenders (Barclays, HSBC, Lloyds and RBS) in the way they mislead business customers into taking out the policies.

At the time it was estimated that up to 28,000 insurance policies could have been mis-sold to UK businesses but, in July, seven more banks were asked to carry out “redress exercises and past business reviews” – the preliminary results from which have prompted the FSA to increase their estimate of compensation claims for mis-sold interest rate derivatives by more than a third.

There are even suggestions that the number of companies claiming compensation for mis-sold interest rate swaps could increase further if the FSA decides to investigate fixed-rate business loans, sold by the banks, which contained embedded derivative contracts that have left some business customers with large break costs which they say they were never warned about.

A number of businesses are bypassing bank refunds for mis-sold insurance and heading straight for the courts according to a senior solicitor.

His comments follow the case of Sara Pearson – a small business owner who was mis-sold an Interest Rate Swap Agreement by Barclays Bank, and who recently settled her claim for bank refund for mis-sold insurance out of court for an undisclosed amount estimated to be over 200,000 pounds.

Barclays Bank was one of four high street lenders named by the FSA in June as being guilty of “serious failings” in the way that insurance policies were sold to small and medium sized business over the past decade – the other three being the Royal Bank of Scotland, HSBC and Lloyds.

Now, despite a 6 billion pounds rate swap mis-selling compensation scheme being set up by the FSA, businesses are looking for a swifter resolution than the option of waiting for the banks’ “redress exercise and past business review” which does not currently have a deadline.

Ali Akram – a barrister with City law firm LexLaw – acknowledged the increase in enquiries regarding compensation for mis-sold interest rate swaps. “After years of them trying to resolve their disputes with the banks or even simply getting a response, [small businesses] don’t trust that the banks will give them a fair verdict”.

The FSA compensation scheme has been criticised in some quarters as being “very weak” and in others as “nothing more than a press release” and, in response to comments that it is a regulated scheme rather than legal redress, has issued a statement on its web site which reads:-

“Customers who are unsure about whether they are still able to bring about court proceedings or are concerned that they may run out of time should they decide to issue court proceedings, should consider seeking legal advice.”

Considering the number of businesses who are bypassing bank refunds for mis-sold insurance and heading straight for the courts, it would appear that the FSA advice is being taken seriously.

The Financial Services Authority (FSA) has announced that a rate swap mis-selling compensation scheme is to be established to refund businesses who have been mis-sold Interest Rate Swap Agreements since December 2001.

The 6 billion pounds compensation scheme is to be funded by four banks who have admitted that they mis-sold up to 28,000 insurance policies to small and medium sized business by encouraging them to take out unsuitable and costly protection against an interest rate increase on finance provided by the high street lenders.

The four banks named by the FSA were Lloyds, HSBC, the Royal Bank of Scotland and Barclays – whose chief executive, Bob Diamond, is already under pressure to resign from his post following the LIBOR rate fixing scandal. The banks have also been told to discontinue marketing Interest Rate Swaps or foreclose on any business which may be affected by the mis-selling of rate swap agreements.

In addition to the establishment of a rate swap mis-selling compensation scheme to provide compensation for the mis-sold interest rate swaps, the banks have also been instructed to conduct a “redress exercise and past business review” and contact any business that may be entitled to compensation for the mis-selling of an IRSA.

The FSA said that it found “serious failings” in the way the UK´s four biggest lenders sold Interest Rate Swap Agreements to small businesses and gave examples of where business owners were not explained the risks or costs of entering rate swap agreements or only granted finance on the condition that insurance policies were taken out.

In some cases the FSA discovered Interest Rate Swap Agreements which were for higher amounts than the loan value or for longer terms while, in others, banks were allowed to exit the insurance policy if it became too expensive for them to maintain but not the business. Businesses that have seen the value of these products move against them as rates fell during the recession now owe banks crippling sums in interest payments each year.

The FSA has said that not all businesses will be able to benefit from the rate swap mis-selling compensation scheme and that the exact redress will vary from customer to customer – with some finding that existing finance products are cancelled or replaced, and others receiving partial or full refunds of their agreements.

Passengers who were on the Costa Concordia cruise ship which capsized on January 13, 2012, after straying off-course and hitting a submerged rock have had 11,000 Euros (14,460 dollars/9,180 pounds) compensation for ruined cruise offered to them by Costa Crociere SpA – the Italian subsidiary of Carnival Cruises.

 The offer of compensation for ruined cruise comes after negotiations between the company and consumer groups in Italy, and compensates any passenger who was rescued from the stricken ship that did not suffer any physical injury. Those that did will be approached individually, according to the company.

 The ruined cruise compensation is intended to cover the psychological trauma that passengers might have suffered on that disastrous evening in January, and for any personal effects they may have lost when the cruise ship went down. However, some consumer groups are not happy with the size of the offer, and are advising passengers aboard the ship to seek professional medical advice before accepting it.

 Those of the 4,197 crew and passengers who do accept the compensation for ruined cruise will receive their money within seven days, however the offer comes with the proviso that acceptance disqualifies passengers from making future compensation claims for injuries against Costa Cruises or any of its associated companies.

Thousands of breast implant recall compensation claims could emerge from women worried about the Poly Implant Prothese (PIP) recall in the UK.

When the recall was first announced in March 2010, the advice provided at the time by the French medical device regulatory authority AFSSAPS was for women who were concerned over their PIP breast implants to undergo an ultrasound scan to check for suspected ruptures of the implant sac.

Subsequently it emerged that the recalled breast implants, which have a higher incidence of rupturing than is usual, also contained an unauthorised silicone gel which could cause an inflammatory reactions in certain women. Now health officials in France are advising for all women who have received PIP recalled breast implants to have them removed.

Although the UK´s medicines watch dog – the Medicines and Healthcare products Regulatory Agency – insists there is no risk of cancer from this lower grade silicone gel, one woman in France is known to have died due to anaplastic large cell lymphoma and many women in the UK have suffered unusual and painful symptoms once the silicone gel has secreted into their lymph nodes.

With the manufacturer of the recalled breast implants having gone out of business since the recall, breast implant recall compensation claims are being directed against the clinics and surgeries which originally performed the breast implant operation – not only for the physical ailments caused by the ruptured implants, but for the emotional distress of suffered by the affected women who may not yet be aware of how badly their health has been affected.

A ten year old girl from Devon has been awarded 1.78 million pounds at London’s High Court in a case against her GP who failed to make a home visit when the child contracted meningitis.

Lydia Cross, from Braunton, North Devon, was just two years of age when she fell ill in 2003 with septicaemia. Her worried parents – Jodie and Tony – called their local GP, Dr. John Harrison of Malmesbury, only to be told that they could not have a home visit because it was against surgery policy.

Instead, Dr. Harrison gave medical advice over the phone – believing that Lydia only had a virus. Only when the sickness persisted were the family able to make an emergency appointment six hours later and, as a result of this delay, Lydia had to have both of her legs amputated.

Lydia’s parents sued Dr. Harrison, claiming that the disease could have been cured had the doctor made a house visit. After an investigation into the circumstances, Dr. Harrison admitted liability and said in a statement that he “could have done more” for Lydia.

The case was brought before the High Court to determine the amount of compensation to be awarded, and a settlement of 1.78 million pounds was agreed to provide Lydia with prosthetic legs for the rest of her life. Each set of legs costs approximately 15,500 pounds and Lydia will require regular treatment on her legs and new limbs as she grows.

Two teenagers, who claimed to have suffered disability following heart surgery at the Bristol Royal Infirmary when they were children, have each had medical negligence compensation awards of 500,000 pounds approved in the High Court.

The teenagers – Kristian Dixon (19) and Jessica Johnson (18) – were both babies when undergoing heart surgery at the hospital in 1992 and 1993 respectively.  Mr Dixon claimed that brain damage sustained when he was sixteen months caused cognitive and learning difficulties, while Ms Johnson has required permanent care ever since her heart surgery.

It was alleged at the High Court in London that both had sustained brain damage due to professional misconduct by Surgeon Mr James Wisheart and hospital manager Dr John Roylance – who were struck off following a review into the deaths of 29 babies at the hospital between 1988 and 1995 – and Dr Janardan Dhasmana, who was barred from performing heart surgery at a disciplinary hearing in 1999.

Approving the awards, which were agreed by United Bristol Healthcare NHS Trust without admission of liability, Mr Justice Owen commended the families of both teenagers for the devoted care they had given over the years.

Barclays Bank has admitted mis-selling an investment bond to two elderly pensioners from Lancaster, and now face a professional negligence compensation settlement of 23,000 pounds.

The couple, Bob (73) and Lilian Baldwin of Waddington, Lancashire, were persuaded by the bank to put 80,000 pounds of their savings into a bond which was promoted to them by the bank as being a cautious investment. However, the bond was in fact speculative, and its subsequent underperformance lost the couple 14,000 pounds.

Mr Baldwin was forced to take legal action after several unanswered letters of complaint to Barclays chief executive John Varley, and only after the Baldwins had taken professional advice were Barclays prepared to admit their professional negligence, and offered the Baldwins 23,000 pounds in compensation.

Note – This is just one instance of mis-selling by Barclays, who were fined 7.7 million pounds by the Financial Services Authority in January 2011. It is estimated that more than 12,000 clients have been victim to their professional negligence.